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External scrutiny

Freedom of information

In 2004–05, 40 requests were made to Customs under section 15 of the Freedom of Information Act 1982 (FOI Act).

The cost to Customs of administering requests is high and applicable fees and charges, unchanged since 1982, do not recover actual costs. The size of requests increased significantly. Large requests place significant pressure on the organisation and can result in processing of applications being delayed.

Section 8 of the FOI Act requires Customs to publish details about certain agency functions and documents. This includes details about the way the agency is organised, functions, decision-making powers, arrangements for public involvement in the work of the agency, documents held by the agency and the way in which members of the public may obtain access to these documents. This information is at Appendix B.

Figure 59: Requests made under the FOI Act

	2002–03	2003–04	2004–05
Requests received*
Section 15	41**	42**	40**
Section 54 (internal review)	4	4	7
Section 55 (AAT review)	1	2	3
Total	46	48	50
Decisions on section 15 requests
Access granted in full	15	12	9
Access granted in part	22	15	14
Access refused	4	3	6
Requests transferred	1	0	0
Requests withdrawn	5	8	6
Time taken to process section 15 requests
0–30 days	26	19	13
31–60 days	11	10	6
61–90 days	3	1	6
90 plus days	1	0	3
Fees and charges ($) collected for section 15 and section 54 requests
Total application fees collected	1 290	1 071	1 390
Total charges notified	7 531	2 046	4 341
Total charges collected	3 405	1 066	3 177
Outstanding charges at 30 June	4 126	980	424

* A section 15 request is a request for access to information. A section 54 request is a request for a decision about a section 15 request to be reviewed by Customs (internal review). A section 55 request is a request for a decision about a section 15 request to be reviewed by the AAT (external review). Further information on these requests is available in the Freedom of Information Act 1982.

** Includes requests carried over from the previous financial year and requests still being processed at the end of the financial year.

Ministerial representations

The Minister for Justice and Customs received 1915 items of Customs related correspondence. Customs provided the Minister with advice and recommendations on the 1557 items that required a response. Major issues were:

• applications for permits to import goods
• information on import requirements
• the payment of Customs duty and goods and services tax on imported goods
• anti-dumping investigations
• processing of passengers at airports
• changes to passenger concessions
• coastal surveillance matters
• changes to legislation and regulations administered by Customs.

Customs also provided the Minister with 455 briefings on issues including:

• initiating anti-dumping investigations
• significant seizures of prohibited imports such as illicit drugs
• proposed changes to legislation and regulations administered by Customs
• other significant policy and procedural matters.

Figure 60: Ministerial correspondence and briefings

	2002–03	2003–04	2004–05
Ministerial correspondence received on Customs issues	1 413	1 669	1 915
Ministerial briefings provided by Customs	397	510	455

Privacy matters

There was one complaint to the Privacy Commissioner against Customs in 2004–05. The issue was Customs failure to provide access to personal information held about an individual. The complaint was closed under section 41(1)(f) of the Privacy Act 1988 on the grounds that the Freedom of Information Act was a more appropriate manner for the individual to access the information Customs held.

The Privacy Commissioner also conducted two audits of Customs. The first audit related to the collection and management of Passenger Name Records by the Passenger Analysis Unit at Customs. The second audit was a joint audit of Customs and the Department of Foreign Affairs and Trade. The audit tested the information flows between the Department of Foreign Affairs and Trade’s biometric passport trial and Customs use of the prototype biometric passports in the SmartGate facial-recognition trial. 

While both reports made recommendations to limit privacy risk, no breaches of the Privacy Act were found.

Commonwealth Ombudsman matters

Figure 61 outlines complaints and issues dealt with by the Commonwealth Ombudsman in 2004–05. Customs was found to be at fault in one case.

Figure 61: Complaints and issues raised with the Commonwealth Ombudsman

	2002–03	2003–04	2004–05
Complaints raised	70	73	84
Complaints finalised	76	73	85
Issues investigated
Agency defect	2	3	1
No agency defect	10	6	9
Issues withdrawn or lapsed	2	4	1
Ombudsman exercised discretion not to investigate	62	70	65
Issues finalised	82	83	92

Note: More than one issue might be raised in a complaint. Some issues are not completed within the year during which they are raised.

Judicial decisions and decisions of administrative tribunals

Parks Holdings trading as Gladstone Chemicals (Full Federal Court)

This case was an appeal by Parks Holdings that imported petroleum product described as ‘gas oil’ was classifiable as diesel fuel in the Customs Tariff Act 1995 as contended by Customs.

A key issue was whether the demand for duty payable was valid in view of the Customs officer issuing those demands not having a delegation to make them under s165 of the Customs Act. Rather, he had a delegation under s165 of the Excise Act 1901.

The Court at first held that it could not remedy the written delegation which contained a clerical error. However, as Parks Holdings had acted fraudulently (by whiting-out the description of ‘gas oil’ from its supplier’s invoice) the demands for duty did not have to comply with s165 of the Customs Act. Instead the Court held that the demands were valid because the Customs officer was a Collector within the meaning of that Act and was therefore entitled to make such demands under s153.  Parks Holdings appealed only that aspect of the Court’s decision to the Full Bench of the Federal Court.

The Full Court upheld the validity of the demand as provided for under s167 of the Customs Act and, therefore, the Tribunal’s jurisdiction under s273GA(2). The word ‘demanded’ in s167(1) does not refer to a demand expressly authorised by a particular section of the Customs Act. Further, if an administrative decision maker purports to act under one head of power which does not exist, but there is another head of power available which can be satisfied, the decision is valid despite purported reliance on the unavailable head of power.

The Full Court affirmed the High Court’s observation in Malika Holdings Pty Ltd v Stretton (2001) 204 CLR 290 that s165 of the Customs Act authorises Customs to make a demand for duty short levied as a result of its mistake as opposed to being misinformed by the owner as to the proper duty payable.

Inglewood (Full Federal Court)

This case concerned the decisions made by the CEO of Customs and the Trade Measures Review Officer (TMRO) to terminate an investigation into the alleged subsidisation of olive oil exported to Australia from Greece, Italy and Spain. Customs had conducted the investigation in response to an application lodged by Inglewood. The CEO terminated the investigations, after approximately five months, into the alleged subsidisation and dumping of the olive oil. The TMRO affirmed that decision. Inglewood then appealed the decision to the Federal Court and subsequently the Full Bench of the Federal Court.

The Federal Court held that s269TDA(2)(b)(i) of the Customs Act permitted the CEO to terminate the investigation if satisfied that there was no countervailable subsidisation of the goods. The CEO was not required to refer any preliminary issue to the Minister to reach that state of satisfaction. 

The Federal Court also held that the CEO erred in expressing the test of s269TDA(2)(b)(i) in the negative—that he was not satisfied that a countervailable subsidy had been received in respect of the goods—rather than in the affirmative—that he was satisfied that a countervailable subsidy had not been received in respect of those goods. However, the TMRO did not replicate the error. The Full Court affirmed this.

The Federal Court also affirmed the CEO and TMRO’s finding that a subsidy was not received. However, the Full Court held, more firmly than the Federal Court, that the CEO erred in addressing the test of subsidies paid to the olive growers as one which conferred a benefit on the exporter—rather than in relation to the exported goods. Both Courts found that the TMRO, whose decision supersedes the CEO’s decision, did not make the same error. The Full Court dismissed Inglewood’s appeal.

Holden (Full Federal Court)

This case was an appeal to the Federal Court by Holden from a decision of the Administrative Appeals Tribunal that Holden was not eligible to claim drawback of credits issued to it under the now defunct Export Facilitation Scheme (EFS). The credits had been used to offset Customs duty liability on imported motor vehicles and components that were subsequently exported.

The EFS was an administrative arrangement which had some statutory recognition in Item 41A of Schedule 4 to the Customs Tariff Act 1995. The issue for the Court was whether EFS credits could be treated as duty for the purposes of claiming drawback. 

The Court held that the use of EFS credits did not amount to a payment of duty. The Court agreed with the Tribunal’s reading of Item 41A. The duty payable when EFS credits are employed is the amount remaining after the EFS credits are used to reduce the amount of duty rather than the amount before the reduction. Regulation 136B of the Customs Regulations 1926 prevents an importer from claiming drawback of import duty to the extent that any ‘rebate’ was allowed on that duty.

The EFS has now been replaced by the Automotive Competitiveness and Investment Scheme. Credits issued under the latter scheme can be counted as duty for drawback purposes (see s168(2) of the Customs Act).

Eberle (Federal Court)

This case was an appeal to the Federal Court by Mr Eberle from a decision of the Administrative Appeals Tribunal that the transaction valuation method (or purchase price at time of contract of sale) instead of the fall-back valuation method (or vehicle’s value in Australia at time of importation) applied in determining the customs value of an imported used motor vehicle. That vehicle had been remotely purchased from the United States, stored and not used prior to its importation into Australia some three years later.

The application of the transaction value method depended on whether the circumstances of the purchase of the vehicle came within the definition of ‘import sales transaction’ under s154(1) of the Customs Act.

The Court found that the purchase of the vehicle was not an import sales transaction. For such a transaction to exist, the contract of sale from its terms or surrounding circumstances must be a contract for both the importation into Australia and exportation from the United States of the vehicle. Mr Eberle’s purchase of the vehicle was and remained a domestic sale, irrespective of his intention to ultimately import the vehicle.

Auditor General’s reports

The Australian National Audit Office (ANAO) audited the financial statements of Customs in accordance with its annual financial statements review of Commonwealth entities.

• The ANAO conducted two performance audits specific to Customs:ANAO Report No.16 2004–05—Container Examination Facilities
• ANAO Report No.41 2004–05—Administration of Security Incidents, including the Conduct of Security Investigations

The ANAO is preparing final reports for the following reviews that involved Customs:

• Advance Passenger Processing
• Internet Security—Follow-up
• Senate Order for Departmental and Agency Contracts (2004 Calendar Year)
• Counter terrorism Coordination Arrangements
• Customs Compliance Assurance Strategy for International Cargo
• Management of Net Appropriation Agreements.

Other reports relevant to Customs released in 2004–05 included:

• ANAO Report No.3 2004–05—Management of Internal Audit in Commonwealth Organisations
• ANAO Report No.4 2004–05—Management of Customer Debt
• ANAO Report No.6 2004–05—Performance Management in the Australian Public Service
• ANAO Report No. 10 2004–05—The Senate Order for Departmental and Agency Contracts (Calendar Year 2003 Compliance)
• ANAO Report No. 12 2004–05—Research Project Management Follow-Up Audit
• ANAO Report No. 13 2004–05—Superannuation Payments for Independent Contractors working for the Australian Government
• ANAO Report No. 15 2004–05—Financial Management of Special Appropriations
• ANAO Report No. 21 2004–05—Audits of the Financial Statements of Australian Government Entities for the Period Ending 30 June 2004
• ANAO Report No. 22 2004–05—Investment in Public Funds
• ANAO Report No. 26 2004–05—Measuring the Efficiency and Effectiveness of E-Government
• ANAO Report No. 37 2004–05—Management of Business Support Service Contracts
• ANAO Report No. 40 2004–05—The Edge Project
• ANAO Report No. 44 2004–05—Defence’s Management of Long-term Property Leases
• ANAO Report No. 46 2004–05—Management of Trust Monies in CAC Act entities
• ANAO Report No. 49 2004–05—Administration of Fringe Benefits Tax
• ANAO Report No. 52 2004–05—Legal Service Arrangements in the Australian Public Service
• ANAO Report No. 55 2004–05—Workforce Planning
• ANAO Report No. 56 2004–05—Interim Phase of the Audit of Financial Statements of General Government Sector Entities for the Year ending 30 June 2005
• ANAO Report No. 57 2004–05—Purchasing Procedures and Practices

The Customs Audit Committee monitored the implementation of the recommendations arising from the Customs audits. The committee also sought comments from line areas on recommendations that might have relevance to Customs. These responses were circulated to the Customs Executive.

The ANAO also issued Better Practice Guides for Fraud Control in Australian Government Agencies, and Public Sector Audit Committees. Customs addressed some of the suggestions and information in these guides and incorporated them into the Fraud Control Plan, and the operations of the Audit Committee.

Further information on ANAO reports is available on the ANAO Internet site at www.anao.gov.au.

Parliamentary Committee reports

Joint Committee of Public Accounts and Audit

Customs provided submissions to the:

• Review of Auditor General’s Report (Audit Report No 16 (2004–05) – Container Examination Facilities)
• Inquiry into developments in aviation security since the Committee’s June 2004 Report 400: Review of Aviation Security in Australia.

Joint Standing Committee on Foreign Affairs, Defence and Trade

Customs provided a submission to the Committee’s inquiry into Australia’s relationship with the Republic of Korea, and the developments on the Korean Peninsula.

Senate Economics Legislation Committee

The Committee inquired into Customs Tariff Amendment (Textile, Clothing and Footwear Post 2005 Arrangements) Bill 2004. The Committee reported to the Senate on 30 August 2004.

Senate Foreign Affairs, Defence and Trade Committee

Customs provided a submission to the Committee’s inquiry into Australia’s relationship with China. The Committee is due to report to the Senate by 15 September 2005.

Senate Standing Committee for the Scrutiny of Bills

Customs provided a submission and appeared at the Committee’s inquiry into entry, search and seizure provisions in Commonwealth legislation. The Committee is inquiring into the Government’s response to its previous report on entry and search provisions, tabled in 2000, and provisions made since the report was tabled.

Senate Legal and Constitutional Committee

Customs appeared before two Senate Legal and Constitutional Legislation Committee Estimates hearings:

• Additional Estimates Hearings, 14 February 2005
• Budget Estimates Hearings, 24 May 2005.

Customs answered a total of 111 Questions on Notice from these hearings, (68 from February 2005 and 43 from May 2005). Customs also answered 154 Question on Notice received in place of the November 2004 Supplementary Budget Estimates hearings, which includes 20 responses to portfolio Questions on Notice.

House of Representatives Standing Committee on Legal and Constitutional Affairs—Averment provisions

On 2 April 2003, the Committee announced an inquiry into averment provisions in Australian Customs legislation. The 2002–03 Customs Annual Report (see pages 32 and 119) and the 2003–04 Customs Annual Report (see pages 116 and 117) contain information concerning this inquiry.

The House of Representatives Standing Committee on Legal and Constitutional Affairs Committee tabled its report in Parliament on 31 May 2004, Modern-day usage of averments in Customs prosecutions. The report contained six recommendations.

The Committee’s recommendations concerning amendments to Customs legislation are similar to comments by the Australian Law Reform Commission in its report No. 95 Principled Regulation: Federal Civil and Administrative Penalties in Australia tabled 19 March 2003. Recommendations 13-1, 13-2 and 13-3 in this report address issues specific to Customs legislation, including recommendations on averments and characterisation of Customs prosecutions and are referred to under Australian Law Reform Commission report on Federal civil and administrative penalties. The Government response is pending.

Further information is on the Parliament House website at http://www.aph.gov.au/house/committee/laca/averment/report.htm.

 

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